Home reposessions could rise with rates
A leading banker has told the Guardian that Britain could see a rise in home repossessions in interest rates increase.
The newspaper reports that Richard Banks, CEO of UK Asset Resolution also expressed his worry that the Labour government’s idea during the crisis to keep families in their homes was causing them to incur even more debt.
Banks expressed his views the day after the BIS told the Bank of England it would soon have to raise its rates to avoid inflation.
Figures from UK Asset Resolution, the company which runs the nationalised mortgages of Bradford and Bingley and parts of Northern Rock, show a worrying trend in mortgage holders. 23,000 of their customers are more than 6 months behind with their payments, and Mr Banks has expressed concern that the number of people falling behind could increase rapidly if lenders do nothing to prepare for rate rises.
Mr Banks believes that this problem was caused by the industry’s reaction to the financial crisis in 2008. Many mortgage providers granted forbearance to their customers by reducing the monthly payments on their homes. This, Banks believes, was too lenient.
The Council of Mortgage Lenders has forecast an increase in repossessions from 40,000 this year to 45,000 in 2012, which despite being high, is well below the 75,500 peak in 1991.